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dcblogs writes "New York state plans to replace as many as 500 IT contract workers with a new type of temporary state worker. The state estimates it can save $25,000 annually for each contracting position that is in-sourced. This is the result of a new law creating 'term appointments,' which strip away some hiring and firing rules that apply to permanent state workers. These term appointment workers are employed 'at will.' Term appointments can be up to five years and workers get state benefits. Proponents of this change said a state IT worker might earn an average of $55 an hour, including benefits, while the state pays its contractors an average of $128 an hour for workers in similar jobs."

Term appointments can be up to five years and workers get state benefits. Proponents of this change said a state IT worker might earn an average of $55 an hour, including benefits, while the state pays its contractors an average of $128 an hour for workers in similar jobs.

Of course, some of that $128/hour the contractor gets goes toward employee benefits... and the cost to the state will be more than $55/hour including benefits...

Term appointments can be up to five years and workers get state benefits. Proponents of this change said a state IT worker might earn an average of $55 an hour, including benefits, while the state pays its contractors an average of $128 an hour for workers in similar jobs.

Of course, some of that $128/hour the contractor gets goes toward employee benefits... and the cost to the state will be more than $55/hour including benefits...

More like $50/hour goes to the peon doing the actual job, and $78/hour goes to the contract holder.

It may not be true, but the wording they've chosen is saying that the $55/hr includes the cost of benefits -- not that the cost is $55/hr plus benefits. So you're comparing hourly cost including benefits to hourly cost including benefits.

Ah, but what I get from this, is that they are temps, and that hiring them as temps, they don't need to pay the same benefits as the permanent workers. So now, they get away with paying less for the same labor. Clever!

Now, how long until off-shored companies realize they can do that too and cut their costs?

But presumably it's still less than $128/hr, which makes the change worth it. Although personally I'm wondering why they're pushing for making these folks "temporary". As far as I'm concerned they should just hire them as state employees and be done with it.

Unless, of course, there's a lot of efficiency coming from each of the contracting organizations having a separate sales, finance, and management team scurrying around trying to direct state money to their company.

Making them regular old unionized state workers makes them incredibly hard to fire, among other things. so you end up with a higher head count than you might otherwise, because you have to hire people to carry the dead weight.

Temps are expendable positions, it's harder to remove full time postition. full time position are often assigned by the legislature directly to a department. You can't remove or add new ones at will. Temp position are different.

That's true and it makes perfect sense if they're turning these into 5-year positions because they won't need IT people 5 years from now. Anyone think that's likely?

This is an end run around unions during a time when unions are at their weakest bargaining position. Whether or not your political perspective sees that as a good or bad move, the only question that needs to be asked is "Is this a necessary step given the current fiscal climate?" Perhaps it is, but it's also another step in the ongoing "race to

Without knowing how the math works in this case (based on having done contract development for government entities in the past; my experience may or may not be relevant here)... probably, state employees are entitled to a set of benefits and health insurance that are really good, vs. the probably not very good benefits the temporary workers will get.

Really good benefits are expensive. The government employees I last worked with, for example, had health care that paid for basically everything with no copays

Doing this will likely drive contracting costs down. We all know how much private companies make off of govt contracting jobs. Maybe this will make them a bit more realistic, and be competitive in 5 years?

Locking them in for 30 years only creates "guaranteed" jobs, and we all know what happens to efficiency in gov't positions like those. Firing people in from gov't jobs is notoriously difficult, this way they have an auto-fire mechanism and if they want them back, they can re-hire them. As dirty as it i

and the cost to the state will be more than $55/hour including benefits...

Well... duh. Assuming 40 hours/week and 4 weeks/month, that's 160 hours. I know a man who's recently retired and has some serious risk factors that put private insurance for him at $600+ per month, so assuming he's the high end of that... it's what, just under $4/hour more?

Round it up to $60/hour for the pay+benefits for each man hour they incur, and they're still more than halving their costs. That sounds like a win to me, and I'm not even into finance.

I know a man who's recently retired and has some serious risk factors that put private insurance for him at $600+ per month

That's actually quite low.

If I had to go out on the "free market" to buy health care, I'd be paying about $1100 per month. For myself. And except for an unhealthy appetite for the triple chocolate cake from Alliance Bakery over on Division Street, I'm in good shape.

I've got a friend who's a martial arts instructor and is in the best shape of any 50 year old I've ever met. When he was

Apparently health insurance costs vary drastically with location. It's no wonder people are so polarized about the urgency of health care reform. If you live in an area that already has affordable health insurance, chances are you think little needs to be done. If you live in an area that does not have affordable health insurance, chances are you think much needs to be done.

For instance, $120/month in Maricopa County, AZ would get me a PPO plan with a $2500 deductible and 0% coinsurance. There are dozen

This isn't about saving actual money only being able to say that you cut IT wages and saved thousands. Typical wrap rates built into contracting employees are between 2 and 3. Most small companies have a wrap rate in the low 2's but large companies or the government personnel are typically 3 or above so that $55/hour becomes more like $165/hour in actual costs, but how can you expect a lifetime politician to understand something as simple as that.

the cost to the state will be more than $55/hour including benefits...

Maybe yes, maybe no. If $30 of that $55 per hour is spent on wages, that comes out to an average of $60,000 a year. That's pretty typical for your average, entry to junior level IT job. At $30 an hour, that leaves $25 per hour for benefits, or $1000 per week / $4000 per month. Looking at it in those terms, $55/hour doesn't seem to be that low of a number.

They're called "slaves", actually. And "right-to-work" laws really mean that you have the right to be fired for no reason and have no recourse. Funny what happens when you let corporations write the laws in this country.

Contractors have inflated pay to deal with the fact that they don't have steady employment (which in our fucked-up benefits system means you don't have reasonably priced healthcare, insurance, or retirement savings.)

So yeah, this is a win for IT workers. It's a loss for standard state employees, but these IT workers get a steady job with decent pay where they once had high-paying jobs, most of the money from went was thrown into basic necessities, not to mention looking for new jobs.

"Contractor" in this sense does not necessarily mean "independent contractor". Most "government contractors" are employees of firms and get paid on W-2s like anybody else. The "contract" is government with firm, not government with individual.

"Contractor" in this sense does not necessarily mean "independent contractor". Most "government contractors" are employees of firms and get paid on W-2s like anybody else. The "contract" is government with firm, not government with individual.

QFT. For some reason on IT sites posters seem to equate "contractor" with "someone who works freelance by running their own business."

Most contractors are managed by a contracting firm, and get nowhere near what the firm bills out for their time.

I used to work for a contracting company and what the customer pays is on average 2 to 5 times as much as you earn. I don't really see the point in anybody outsourcing to a contract company except maybe for temp jobs. However I see people that have been contracting for the same company over 10 years. Think of the money they could've saved by just hiring them outright.

So, who's getting the $55/hr? The employee of the job shop, or the job shop itself?

This is a big deal, because if the State is paying $55/hr to some contracting outfit, that outfit has to take FICA, State and local taxes and insurance payments out (not to mention something for the job shop overhead). That will leave the employee with little more than minimum wage. $128/hr is cheap when its paid to the job shop.

As to the "independent contractor" idea: Good luck with that. If you think the gov't is going to

I think I have a pretty good idea of your philosophical leanings on the subject of labor law, but I'll say this anyway for other readers. "Right-to-work" laws should really be termed "opportunity-to-work" laws, because the economic theory is that by lowering the potential risks for employers, they will be more willing to take those risks. Yes, you have the "right" to be fired immediately, but without those laws you might never have had the job in the first place.

Unions had their chance. They were needed but they have become more of a threat than anything ever. They use their union dues to buy politicians to protect their workers over everything. The end result is lazy fucks that cant be fired making items and services way more expensive. In a state like California where the state employees were unionized we have massive expenses that can not be undone. We can't save money by letting dope users out of prison because even if we reduce the inmate population by half we

When you fire a "right to work" employee without cause, they are fully eligible to claim unemployment benefits. The vast majority of workers in the US are in "right to work" situations, and most of the time it works just fine. I'm not sure if NY's rationale or methods are the best for their situation, but I am not so sure that everyone in a "right to work" situation is slave. As someone who has made a fine living over the last 30 years and has never belonged to a union, I'm confident that being in a unio

Employees are more loyal, and generally care more about the work they are doing than outside contractors.

I have mixed feelings about creating the positions as a special semi-temporary group. Its good in that it allows the state to actually hire needed people, but it sounds like they are second-class employees. Only here temporarily. Not really part of the team, but expected to work extra hard in the hopes of someday getting to be a real employee...

That's exactly it. The gov needs to be able to flexibly hire new staff on demand and fire them on demand. They used contractors for this, now they want to do that in house. This is the new cloud of employee power.

Employees are more loyal, and generally care more about the work they are doing than outside contractors.

I'm not saying you are wrong because we both work with different groups of people most likely in different countries. However what you describe is the exact opposite of my experience. I find permanent staff just want to make it to the end of the day and go home. Few really care about what they do and the ones that do get drawn into political battles with those that don't. The bad ones can't be fired unless they really screw up big. The only exceptions are in companies that are still small enough to tell goo

Government work is kind of a weird bag. I recently did some contract work for a government entity.

On one hand, yeah, some of the employees evinced a level of laziness that could not long survive in the private sector of small to medium size. (My experience is that larger corporations and government have similar ratios of useless employees.)

On the other hand, the really shitty part of being a public servant is that you have to deal with the public. Probably, most of the people you deal with in your daily life are reasonably sane, mature, and normal. You might start to believe, as I once did, that everyone is like this. I assure you this is not the case. The people I was working with were in a department that had nothing to do with the criminal justice system, and yet, on virtually any topic you could bring up over lunch, they would be able to relate at least one and usually several work stories wherein either someone tried to shoot someone else, or someone urinated on something they shouldn't.

I can honestly say that in the duration of my career, primarily in the private sector, that no one has ever tried to shoot me or piss on me.

So... I can also see why it can be hard to keep good people in government work, too.

If the employee is motivated, their worth more than when they were hired. However, if the gov't can't keep up with compensation, they've got to offer it in other ways, such as job security(sometimes results in lazy employees) or retirement.

This usually doesn't work, as most tech workers don't expect to stay in their job for 40 years, and the employee leaves for a better job, taking their skills and institutional knowledge.

(My experience is that larger corporations and government have similar ratios of useless employees.)

My experience is that such useless employees tend to accumulate in middle management making life miserable for workers and customers alike. Not to imply that there aren't useless employees among workers or higher administrators; it's just harder to hide incompetence when you either have to do actual work or make actual decisions.

True. Most of the best gov. workers end up leaving to better positions in the private sector, leaving the folks behind who can't hack it in the private sector. Don't believe me? I've seen this first-hand at a DOE lab and a state's IT dept.

It is also hard to manage a department when dealing with substandard employees. What ends up happening is that the department has to work around the substandard employee. They will eventually get terminated after a number of write ups and poor performance reviews but it takes a significant amount of time. Even then the union will go to bat for them and drag out an already long process.

It's not that all state employees are terrible, it's that they're just not accountable for their performance, and it's hard to stay sharp when you don't really have to answer to anyone.

Speaking somewhat from personal experience even if you want, wish and are able to do a good job, or better than what you are doing, interlocking levels of bureaucracy and departmental hierarchies will kill whatever soul and will to live you might have.

If you properly manage a smaller number of very high paid IT workers instead of a much larger number of low paid IT workers, you'll find that the ROI is hugely in favor of the higher paid workers - because they were "properly managed". That includes selection, hiring, and allocation of time and resources. (In many ways it means give them the tools and the requirements and then get out of the way.)

Now if you are lousy managers it makes sense to hire low paid IT workers because you pay less and you won't

Back when I used to work for this little local aviation company, the manager in charge of wiring design (engineering) was also the liason with our IT department. It was his job to set requirements for engineering computing needs. But on the engineering side, everything was islands of automation, crippled islands of information systems. Everything had to be hand-entered into incompatible computing systems (by hand) and data moved back and forth manually. It was

This sounds like a good move for government IT. Governments IT shops (especially unionized shops) suffer badly from the dead-sea effect. The more productive IT workers who keep their skills up will tend to stay for a few years ago go. The less productive are free to stay for 30 or 40 years because they can't be fired and have no potential of finding a job that pays as well. Over time the IT department becomes heavy with unproductive employees.

Management: IT is expensive - we can save money by OUTsourcing.5 years later...

Management: IT is expensive - we can save money by INsourcing.5 years later, Go to line 1...

Those of us who've been in IT for a while have seen this cycle through a few times. After much reflection, I conclude that there is no such thing as competent management.

Exactly so. Middle management in big companies is a dumping ground for the inept, burnt out, and jaded. They fly around the world constantly to escape the work they should be dedicating themselves to. Their ignorance of the departments and technologies they manage is often shocking.

Unless things are really different there, its pretty safe to assume that most of those employees arent making anything close to $128, having been in that area of employment I can assure you for most of the people doing the work, $55 will be a raise. Most contracting firms (yes there are some exceptions) these days are just a legal form of prostitution, the pimp gets the big money unfortunately they tend to have enough pull to block the independent contractor from most companies looking for help.

I know of this issue first hand being a IT contractor and working for the state. Where Im at they have approximately 125 IT contractors. So far they have laid off 15 IT contractors, are trying to convert 15 or so more to government service. Next in Oct all IT companies will have to bid through a Managed Service Provider. Basically an appointed IT contractor that all the agencies will go through to source contractors. I don't believe they plan on eliminating all contractors since I don't think they can

Proponents of this change said a state IT worker might earn an average of $55 an hour, including benefits, while the state pays its contractors an average of $128 an hour for workers in similar jobs."

I assure you, the average contractor on a state job doesn't pull in $128/hour. His pimp...I mean contract agency...charges on average $128/hour for his services. The contractor gets only a piece of that.

If they were taking full-timers and laying them off then rehiring them as contractors (with no benefits) that's clearly illegal - it's a process called "conversion".

But they are simply saying that jobs that are currently filled with a contractor will be filled with full-time "at will" employees now. Contractors are already "at will", and the contracting firm is (in theory) paid a lot extra because they can rapidly add or subtract resources as needed. You pay extra for the flexibility. Flexibility which, in this case, the state doesn't need as much.

Now the state is saying "we have people that we know we'll need for 5 years or so. We can't hire them full-time under existing State terms because we cannot eliminate their positions when we don't need them any more, but it's terribly expensive to hire them for 5 years at about triple what they actually get paid." That $128/hr contractor MIGHT be getting paid $45 an hour with benefits. Their firm takes the rest.

I can't even see the State union getting upset about this, these employees will likely be Union members, with the only exception being they have a fixed term of employment rather than "employed until retired or dead" like most State jobs. But it beats working for the contracting firm.

About the only people I can see getting upset about this is, well, contracting houses.

But the State is large enough that it really doesn't need the assistance finding talent, and the employment terms are long enough that people will still jump at the chance. I mean, c'mon, how many people in "real world" IT last more than 5 years in a given job? My record, after over 20 years in the field, is 4 years 10 months, ending in a layoff. I'm really hoping my current employer is "the one I retire from", because they are really nice folks to work for. But lifetime employment is nearly unheard of nowadays.

It's only "unheard of" in countries where the corporations run the government. Funny, but in the empoverished Socialist third-world hellholes like Germany, or Israel or Sweden, a person staying with the same employer for a lifetime is not uncommon.

Yea, like those socialist countries don't have some serious problems..... Socialism sucks

You know, in the 21st century, using supposedly negative terms like "socialist" are pretty tired. The USA is one of the most 'socialist' nation-states going. The USA spends more per-capita on health care than bogey-man "socialist" countries like Canada and spends billions (trillions?) buying banks, car manufacturers, you name it.

In the USA, the government sticks its nose into who can marry who, spends billions of your dollars saying what drugs people can use, asks me at age 43 for ID when I try to buy a bud lite, posts stupid useless warnings on foods & menus, has ridiculous zero-tolerance policies at schools, goes crazy if Janet Jackson's tit 'slips out'... (think of the children!) and on and on. You won't find many more socialist nanny-states in the world than the USA...

What I'm saying is this is the 21st Century - It isn't 1962 any more, and outdated black & white terms like "socialist" don't make sense in a 21st century context - Particularly from americans who now live in a nation-state that is, in many ways, more of a 'socialist' nation than many countries that they tar with the 'socialist' label. Take healthcare. Most people outside of the USA would consider the heal

Fun fact: everywhere has serious problems, nothing is perfect. Of course, if you don't pretend that an improvement must lead to perfection in order to be meaningful, you start to see where maybe our system could be better.

The important question isn't "does the alternative have problems?", much more useful to ask "would we rather have the set of problems belonging to the alternative, or the set of problems belonging to the status quo?"

Depends on your definition of "IT". A lot of "IT" jobs with required programming skills (basically software developer jobs with a side of support) pay that much. Depends on what you're doing, in what industry, and in what part of the state, but given that a family health care plan in NY costs around $13,000, you're getting $6.00-6.50 an hour just on health care benefits. The people I know working these combined "IT/programming" jobs in NYC are often getting $100K in salary (off a B.S. and five years of work

Pretty much. I used to work for state IT. I'd cringe every time a pointy-hair brought in a contractor, knowing just how much tax money was going up in smoke for someone with no better skills than their permanent employees had -- and there was almost always a contractor doing something, so they could have FTEd that work if they could have got the paperwork through. there were a few of these contractors that actually made good money, but only through generous travel reimbursements. The rest were getting s

"If they were taking full-timers and laying them off then rehiring them as contractors (with no benefits) that's clearly illegal - it's a process called "conversion".

But they are simply saying that jobs that are currently filled with a contractor will be filled with full-time "at will" employees now. Contractors are already "at will", and the contracting firm is (in theory) paid a lot extra because they can rapidly add or subtract resources as needed. You pay extra for the flexibility. Flexibility which,

But they are simply saying that jobs that are currently filled with a contractor will be filled with full-time "at will" employees now.

That's all good and fair and whatnot but the question is what actually happens in future. Why would they make permanent hires when they could go with temporary ones? One of the biggest reasons for subcontracting is because you can get rid of them easily, unlike employees whose many rights are a major pain in the ass for organisations. This goes double for government (local,

I can't even see the State union getting upset about this, these employees will likely be Union members

I work for the NY State tax department's Office of Processing and Taxpayer Services. (When a NY resident pays their taxes, they pay us.)

Every year, we directly hire temporary phone staff for front-line taxpayer assistance -- jobs like "read over the scan of this guy's tax form and look for scanning errors" or "answer this phone call and read this scripted answer to them." These are jobs that could easily be filled by one of the local staffing agencies in Albany, but we hire them directly and, like you say

I once knew a guy who was a contract worker for 11 years. Contract positions can last for quite some time. What I hope New York doesn't do is hire all of their 5-year plan employees and then realize 4 years down the road that they'll have to graduate that class of employee all at once. Or maybe I do; I'm quite conflicted.

In any case, it's yet another indication that IT workers are considered a replaceable, interchangeable cog in the machine. Unfortunately, when your replaceable cogs are essentially your ent

Interesting post. Because he complains that government doesn't obey the same laws as the rest of us, you assume he's conservative. Huh. Or was there something else that tipped his hand? I gave up labeling people a while ago, so I've lost track -- do good liberals nowadays not favor government obeying the same laws as the rest of us?

Good point. The private and public sector do not play by the same set of rules. In other words, there's the Government, and then there's the rest of us. You know how it is. Power accretes and all that.

-1 Reactionary: I'm pretty bleeding heart on most issues, but try as I might, I'm not seeing how the GPP indicated his political affiliation, or did anything other than point out a very mild form of hypocrisy (which I don't consider all that hypocritical, since the government is merely subjecting itself to private industry rules instead of the usual more generous government rules).

The fact remains that unionized government employees are paid 10-20% higher then private sector counterparts and have 4x the benefits package (about $9500 annual in the private sector vs 38k in a fed gov job). Many of the states who are bankrupt are so due to escalated costs of state employees.

If you go in and see that a company has a centralized structure, you try to sell them on decentralization. If they're decentralized, you try to sell them on centralization. If they out-source, preach in-sourcing; if they in-source, preach out-sourcing.

Oh, and in both cases, we have just the products and the consulting teams to help you achieve a synergistic paradigm shift to streamline your enterprise and facilitate a win-win situation with end-to-end empowerment for your core team.

Oh, and in both cases, we have just the products and the consulting teams to help you achieve a synergistic paradigm shift to streamline your enterprise and facilitate a win-win situation with end-to-end empowerment for your core team.

I am intrigued by your ideas and would like to subscribe to your newsletter.

Are we in agreeance that you would bring to the table an outside-the-box, integrated solution that would allow us to recontextualize our monetization of the Cloud?

Actually, I've worked for a state government and never seen an IT postion paid better than in the private sector, including benefits. In fact they usually were getting 10-20% (low estimate) less than the private sector would offer. A dba in state government will rarely ever (don't know any) get the average salary of the market.

If you're having trouble finding an IT position that pays less than $120/hr, then I need to move to wherever the hell you're living. I thought wages in CA were high, but apparently you live in a place where IT smokes cigars made out of rolled hundred dollar bills!

State is paying the contractor company $120/hr for IT employees....the employee is not making $120/hour (unless said employee is a self-employed consultant under contract as opposed to being a W-2 employee w/ a contractor agency).

My company charges around $96/hr to the government for my services. I am definitely not making that much per hour.

Many of the states who are bankrupt are so due to escalated costs of state employees.

That's only one of the three assertions in your post that are factually incorrect. Except for those three false items, you're right about everything else.

It's actually the pensions that are causing so much trouble for the states. And the reason that the pensions are so high is because starting about 30 years ago, management thought they could safely screw workers by offering them high pension benefits instead of higher pay. Then, when people starting living longer than the actuarials were predicting at the time, management realized its error and started demonizing the very contracts that they pushed.

In every single case that I've looked at, the unions were actually looking for higher pay and went with the pension benefits when management stonewalled. If management hadn't tried to screw workers to begin with, this wouldn't have been such a problem.

This goes for public employee unions as well as automobile companies and other large employers.

You left out one of the steps... Not only did the states bargain for higher pension benefits instead of higher wages, they underfunded the pension reserves. In a couple of cases, the reserves were underfunded by 60% or more.

Citation needed. I've worked a U.S. federal gov't jobs and private sector jobs. Same basic skill set required for all of them, and the gov't job required a hell of a lot more in the way of continuing education to perform due to the nature of the work. In base salary, the government paid about 20-40% less. Health benefits were more costly, with higher copays and less generous coverage; I can't say how much it cost the government, but I'm guessing it was less. The retirement match was better in percentage ter

The fact remains that unionized government employees are paid 10-20% higher then private sector counterparts

Do you have any supporting documentation for that claim? All of the State workers that I know went to work for the state for two reasons. The first is job security. The second is the benefit package. In California state workers make considerably less on an hourly/salary basis than their private sector counterparts.

"It's as if the objective is to criticize the government and the arguments vary according to the discussion."

No "as if" needed... that is precisely the objective. Government is universally bad, private sector is universally good, prove the point truthily by whatever means necessary. They've been calling this a culture war all along, how is anyone surprised that they are acting appropriately?

Although actually, I'm not clear on why you're so confident this is a move to "destroy state employee unions"? This wouldn't seem to displace any actual state employees. Rather, it makes a change so the contractors they now outsource (instead of actually hiring state employees who would be part of a union) would be substituted with temporary employees, paid half as much as the contractors were costing them.

Personally, I think contractors are generally "bad news" when it comes to government projects. They

Although actually, I'm not clear on why you're so confident this is a move to "destroy state employee unions"? This wouldn't seem to displace any actual state employeesNot immediately no but think long term for a minute.

Afaict previously the state departments had two options, give someone a job for life or pay a shitload of money to a contracting firm.

Now they have an option that is more attractive then either of the above so why would they do them?

Sure, but because of cronyism and bad economic & political policies, politicians/department heads have been "contracting" jobs that are needed full-time and would have cost less in-house. For example, a Department of Transportation isn't "in the business of IT". For political reasons, a department head may choose to outsource the IT to a contracting company. This allows DoT to claim a lower personal overhead even though it is now paying more than it was before, and "the government is smaller". There

Minus the extra $25k per year that would otherwise be thrown away to the contract firm (or to the IT worker if independently contracted). So in the end, it works for a net win for the state (They could take that $12.5 million they just saved and push it towards the pension package, or reducing taxes, or paying off some of their debt, or something else useful)...

The managers where I work run around making sure they are up2date with it and processify everything. Where once upon a time if a problem arose you knew who to call, spend 5-10 minutes getting updates on personal lives and then sort out whatever problem was presented immediately after.

Now, primarily because of ITIL, the personal phone calls have stopped, problems go into a queueing system (ticketed - and the poor bastard on the Help desk had better have entered the ticket correc

Ironically, it is the Greek public sector workers who are joining the protests because they are being forced to give up the traditional deal of having a modest public sector salary in return for a generous long-term state pension.